For example, in our country, foreign exchange is not freely convertible, import and other foreign exchange needs must be applied to the authorities, after approval, according to the authorities to purchase.
Due to the existence of foreign exchange control in many countries, the relationship between free convertibility is derived. According to the degree of currency convertibility, it can be divided into: a. Fully convertible currency, which refers to the currency that can be generally accepted and recognized by the international community in terms of credit, reserves, etc.
B) Not fully convertible currency, which means that only domestic manufacturers and the public can purchase foreign exchange from financial institutions in their own currency without restriction;
C. A limited convertible currency, a system between full and incomplete free convertibility, with certain restrictions on the way of transaction, the use of funds and the way of payment;
D, Completely non-convertible currency.
Hard money and Soft money: Hard money: A currency that is strong and freely convertible in international financial markets, has a stable value, and can be used as a means of international payment or circulation.
Soft currency: refers to the national currency with weak exchange rate in the international financial market, which cannot be freely exchanged into other countries’ currencies and has low credit level, mainly including Indian rupee and Vietnamese dong.
Hard currency and soft currency are relative terms, it will change with the economic and financial conditions of a country.
For example, the dollar was a hard currency in the 1950s, and a soft currency in the late 1960s and 1970s. Since the 1980s, when the United States implemented high policy and tight monetary policy, the dollar became a hard currency again.
The cash exchange rate is also known as the cash exchange rate.
Theoretically speaking, the selling price of cash should be the same as the selling price of foreign currency payment certificates, foreign currency credit certificates and other foreign exchange forms.
However, in real life, as most countries do not allow foreign currencies to circulate in their own countries, they need to transport the purchased foreign currency to the issuing country or the region where it can be circulated, which requires certain freight and insurance costs, and these costs need to be borne by customers.
As a result, the rate at which banks receive foreign currency cash is slightly lower than the rate at which they buy other forms of foreign exchange.
The exchange rate used by banks to sell foreign currency notes is the same.
Exchange rate is divided into buy exchange rate and sell exchange rate.
ByyingRate, also known as foreign exchange, refers to the exchange rate used by the bank to buy foreign exchange from customers.
Generally, THE EXCHANGE RATE IN WHICH FOREIGN CURRENCY IS CONVERTED INTO DOMESTIC currency IS THE BUYING rate, which EXPRESSES how much DOMESTIC currency it takes TO buy a certain amount of foreign exchange.
The exchange rate, also called “sellingRate,” refers to the exchange rate used by the bank when it sold foreign exchange to its customers.
Generally, THE EXCHANGE RATE WITH FOREIGN CURRENCY CONVERTED INTO LOCAL CURRENCY IS TO SELL THE EXCHANGE RATE, which INDICATES that THE bank needs TO recover THE FOREIGN exchange of a certain amount.
Benchmark interest rate: The benchmark interest rate is the exchange rate between the domestic currency and the benchmark currency or key currency.
Countries in the formulation of their own exchange rate, because of the variety of foreign currencies, usually choose a currency as the key currency, the first formulation of the exchange rate of the local currency to this currency, called the benchmark exchange rate;
Then the benchmark exchange rate set is used to calculate the exchange rate of the local currency against other currencies.
A key currency generally refers to a currency that is widely used for pricing, settlement, free convertibility and generally accepted internationally.
At present, the key currency is usually the dollar, using the domestic currency against the dollar as a benchmark.
The benchmark exchange rate of RMB is the benchmark exchange rate of the main trading currencies (USD, yen and RMB) against RMB on the same day announced by the People’s Bank of China on the basis of the weighted average exchange rate between USD and RMB formed on the previous day.
The benchmark exchange rate of RMB announced by the People’s Bank of China is the benchmark exchange rate for the trading of foreign exchange and RMB among designated foreign exchange banks and between designated foreign exchange banks and their customers (including enterprises and individuals).
Designated foreign exchange Banks based on the benchmark rate is traded in dollars, according to the market on its own set of calculate the yuan against the dollar, a variety of freely convertible currency other than Hong Kong dollars, yen in the middle of the price, in the People’s Bank of China within a prescribed rate floating range make buying rate of foreign exchange, foreign exchange selling rate and on its own, and publicly listed.